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We investigated how financial inclusion reacts to changes in institutional quality and governance in Africa. Many factors hinder financial inclusion around the globe. The main barriers can be Orientation: Literature emphasises that institutional quality and governance are important elements in enhancing financial inclusion. Studies on institutions, governance and financial inclusion in developing economies found that governance and institutions have positively influenced people wanting to make savings and open a formal bank account.Research purpose: This study investigated the impact of institutional quality and governance on financial inclusion in Africa. Motivation of the study:The significance of how governance and institutions affect access to finance has largely been overlooked in previous research. Thus the principal objective of this study is to address this research gap.Research approach/design and method: A system generalised method of moments technique for a panel data of 49 countries for the period 2004-2016 was employed. Main findings:The results obtained suggest a positive impact of institutional quality and governance on financial inclusion within the region. Our study also found a significant positive effect of the lagged value of financial inclusion and banking sector size on financial inclusion for African countries. However, rural to total population and natural resources negatively influenced financial inclusion in Africa. Practical/managerial implications:This study provides implications for policymakers which are fruitful if implemented. Policymakers should facilitate the existence of a transparent legal framework, removal of corruption and enhancing fair administration and judicial proceedings so as to enhance the prospects of financial inclusion. In addition, improving economic freedom and governance levels minifies the informality levels in the financial markets. Contribution/value-add:This study adds value and knowledge to the current body on financial inclusion and governance issues in Africa, which has not received much attention in developing economies.

The last few years have witnessed a rapid development in digital finance that may threaten the manner in which traditional financial services are being used. It opens up new opportunities for low-income groups and small businesses that have limited or no access to formal financial services. Thus, digital financial inclusion plays a vital role in boosting a country’s financial inclusion, fulfilling some sustainable development goals and achieving higher economic growth. This study builds on a new measure of digital financial inclusion to examine the impact of digital financial inclusion and bank competition on bank stability in Sub-Saharan Africa for the period 2014 to 2020 using the two-step System Generalised Method of Moments. An index of digital financial inclusion, z-score, Herfindahl–Hirschman Index (HHI), and non-performing loans were used as data variables. The study findings reveal that digital financial inclusion has a significant positive relationship with bank stability (z-score) and a negative relationship with non-performing loans. The study also found a significant negative effect of bank competition (HHI) on bank stability in line with the competition-fragility view. Policymakers should ensure digital financial literacy for all since it feeds into bank stability and also reduces bank insolvency. They should also find ways of enhancing bank competition which reduces non-performing loans and bank insolvency. On practical implications, the study calls for strategic measures to preserve bank stability, such as complementing digital financial inclusion with financial literacy and enhancing bank competition.

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